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In a surprise move, Heartland Bank has sharply cut its floating and one year fixed home loan rates to levels that will cause its rivals to have a double-take

In a surprise move, Heartland Bank has sharply cut its floating and one year fixed home loan rates to levels that will cause its rivals to have a double-take

As the winter real estate season approaches and housing market activity starts to fall away, one bank is making a big play for the remaining home loans business.

Heartland Bank has cut its already low rates sharply.

Its core one-year fixed rate has been sliced to 1.85%, a -14 basis points drop from what was already the lowest rate in the bank mortgage market.

And it has cut its already low 2.50% floating rate to 1.95%, a major -55 bps reduction.

Further it has cut -40 bps from its revolving credit rate, taking it down to 2.35%.

These are eye-catching changes.

That one year fixed rate is a full -40 bps lower than any of the major banks. It is also -34 bps lower than any other bank's one year 'special', and -24 bps below the Co-operative Bank's one year first home buyer 'special'.

It is easily the lowest one year rate from any institution, ever.

Heartland's 1.95% floating rate is also a market low, far lower than the 3.40% from Kiwibank, or the 2.25% on offer from KiwiSaver provider Simplicity for their members.

One rate Heartland has not trimmed is its reverse mortgage rate which remains at 5.95% pa.

Heartland re-entered the residential mortgage market in October 2020 with its self-serve online home loans application and 1-year fixed rate. Since 31 December, it has experienced a +173% increase in average monthly drawdowns, and has received over 6,600 applications.

Heartland’s online process allows for a faster home loan approval than the traditional process with other lenders. Those who meet the eligibility criteria can fill out the digital application in minutes and get a decision online, with no need to make an appointment or arrange for someone to come to them. The self-serve home loan application is designed to reduce the friction often associated with interacting with a bank, as it allows people to apply for a mortgage at their convenience without the help of a bank representative.

This low-cost model does mean that applicants must meet their strict qualification criteria.

To sweeten the deal and encourage mortgage borrowers to consider them, Heartland are offering an added incentive above the low rate. Those who to their floating term rate and stay floating for 12 months can get a credit of up to $1,500.

To be eligible for a Heartland Home Loan, customers must be refinancing or purchasing a standalone house on a single section in an urban New Zealand centre, have a deposit or equity of at least 20% and intend to live in the home.

One useful way to make sense of these new changed home loan rates is to use our full-function mortgage calculators. (Term deposit rates can be assessed using this calculator.)

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at this time.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at May 12, 2021 % % % % % % %
               
ANZ 3.39 2.25 2.45 2.59 2.89 3.90 3.99
ASB 2.99 2.25 2.49 2.59 2.89 3.19 3.39
3.39 2.25 2.49 2.55 2.79 3.09 3.39
Kiwibank 3.55 2.35   2.55 2.79 3.09 3.39
Westpac 4.15 2.25 3.25 2.59 2.89 3.19 3.39
               
Bank of China  3.45 2.35 2.45 2.55 2.75 2.85 2.95
China Construction Bank 4.70 2.65 2.65 2.65 2.80 2.89 2.99
Co-operative Bank (*FHB only) 2.25 2.09* 2.59 2.59 2.79 3.09 3.39
Heartland Bank   1.85   2.35 2.45    
HSBC 2.79 2.25 2.25 2.35 2.65 2.79 2.89
ICBC  2.89 2.25 2.35 2.35 2.65 2.89 2.99
 SBS Bank 3.39 2.19 2.39 2.49 2.79 2.99 3.19
 [incl Price Match Promise]  2.89 2.25 2.45 2.49 2.79 3.09 3.39

Fixed mortgage rates

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21 Comments

Holy damn all right! Sucks ANZ's long term rates are so shit.

Wonder, on the other side of the coin, how relative support features for term deposits. The point being it is opportune and usually to some advantage to avail oneself of the cheapest mortgage rate on offer because the mortgagee has very little risk should the mortgagor fail, but that obviously does not apply for a term deposit.

10
up

Why anyone banks with ANZ is beyond me -both personal and business banking is crap. All can think of is too lazy to move?

Not my experience, I've used all of the big 5 except Westpac, and still use ASB and ANZ, bnz and kiwibank are rubbish.

They are the ones my mortgage broker suggested so I went with it. Actually had not used them before that....

Often the easier option, have all my lending with them. Just got another property finance through them - so will hang around for another 3 years.
Don't love them, just too lazy to switch.

Keep in mind that these are their advertised rates, they'll be offering the same as the others in the background

"As the winter real estate season approached and housing market activity starts to fall ....."

It is known that real estate market cools of in winter and it is exactly this data that Mr Orr will be waiting to hide behind and use to avoid taking action on speculative demand.

I hope that the other banks don't follow this move as our financial risks are already too high.

If it makes you feel better I doubt the majors will follow.

Great gif of Maxwell Smart, these rates are indeed head turning and eye opening!

I initially thought Agent86 was shaking his head at Groat's comments.

No! Missed by that much.

Great work 99

Just another thing to push up house prices as people can afford to borrow even more!.

I thought the experts said that interest rates wouldn't be going down any further. I can see the RB going negative eventually, especially with the government doing a form of austerity budget and not wanting to spend.

Feels like a desperate move to grab the last gamblers out there before rates move upwards (inflation).

'especially with the government doing a form of austerity budget and not wanting to spend.'

lol. Are you kidding?? They have already backed down on the clayton's pay freeze. This will be the biggest blow-out in budget history, money will be sprayed in all directions.

Low cost business model. Banks could do the whole job online. The drain of bricks and morter and huge staff numbers must be telling.
If an industry is exposed to tech, its the traditional bank.

It could be done online, but cannot under estimate how much guidance and help home buyers (especially FHB's) require that a good home lender provides.

Ummm, I must have struck out on that, in my experience the banks couldnt have been more unhelpful if they tried.

More to come. Notice banks are offering lower rates for longer terms, stay with shorter terms.